Ofcom has announced that it is proceeding with a formal notification to require the legal separation of Openreach from BT, after the telecoms provider failed to offer voluntary proposals that addressed the regulator’s concerns over competition.
Ofcom said that it is is “pressing ahead with its plans to improve broadband and telephone services for people across the country, pursuing better service quality and encouraging greater investment in networks. Creating a more independent Openreach – which works in the interest of all providers, not just BT – is an important part of achieving this.”
Openreach is the division of BT Group that develops and maintains the UK’s main telecoms network used by providers such as Sky, TalkTalk, Vodafone and BT’s retail business.
A statement from Ofcom added: “We are disappointed that BT has not yet come forward with proposals that meet our competition concerns. Some progress has been made, but this has not been enough, and action is required now to deliver better outcomes for phone and broadband users.”
In July, Ofcom said that that BT “has the incentive and ability to favour its own retail business when making strategic decisions about new network investments by Openreach.”
The regulator proposed reforms to address this structural issue, to provide regulatory clarity and confidence to the industry, and ultimately better outcomes for people and businesses. “A more independent Openreach would be well placed to invest in ‘full fibre’ broadband for everyone,” it said.
Ofcom’s proposal requires Openreach to become a distinct company with its own Board. This would comprise a majority of non-executive directors, including the Chair, who are not affiliated with BT. Openreach would be guaranteed greater independence to make decisions on strategic investments, with a duty to treat all of its customers equally.
The regulator is now preparing to notify the European Commission of its intention to implement these plans, requiring the legal separation of Openreach to make it more independent. “Throughout this process, we remain open to BT bridging the gap between its proposal and what is required to address our strong competition concerns,” it said.